NT PHARMA (SEHK: 01011) has announced a conditional agreement to issue new shares to a group of subscribers in order to settle outstanding debts.

The company will issue a total of 847.6 million new shares at a subscription price of HK$0.365 per share. This price represents a discount of approximately 20.65% compared to the closing price of HK$0.46 per share on June 17.

The newly issued shares, to be allotted to seven different subscribers, will be used to offset specific debts owed by the company. The total debt to be capitalised amounts to HK$309 million.

The share issuance is significant relative to the company's existing capital. Assuming no other changes to the share capital, the subscription shares represent about 89.31% of the issued share capital as of the announcement date, and approximately 47.18% of the enlarged share capital post-issuance.

The subscription and debt settlement will be executed as follows: 453 million shares to Golden Base Investment Limited to settle a HK$165 million debt; 250.8 million shares to Annie Investment Co., Ltd to settle a HK$91.56 million debt; 15.1908 million shares to Mr. Wu Jingjie to settle a HK$5.5446 million debt; 48.4185 million shares to Ms. Wu Jingmei to settle a HK$17.6727 million debt; 4.75 million shares to Mr. Wu Tie to settle a HK$1.734 million debt; 41.0959 million shares to Mr. Huang Jianshan to settle a HK$15 million debt; and 34.4143 million shares to Hangzhou Aishengming Technology Co., Ltd to settle a HK$12.5612 million debt.

Several of the subscribers are connected parties. Mr. Wu Tie is the board chairman and an executive director. The third and fourth subscribers are his son and daughter, respectively. Golden Base Investment Limited is 50% owned by Mr. Wu Tie and 50% by his spouse, Ms. Qian Yu. Together, these parties form the Wu Concert Party, which held about 32.06% of the company's shares prior to this transaction.

Following the subscription, the Wu Concert Party's aggregate stake is expected to increase significantly from approximately 32.06% to about 45.95% of the enlarged share capital.

The second subscriber, Annie Investment Co., Ltd, is wholly owned by Ms. Shen Ning, the spouse of Mr. Yang Zongmeng. Mr. Yang Zongmeng, his son Mr. Yang Yi, and the second subscriber constitute the Yang Concert Party, which held about 21.23% of the shares prior to the transaction. Their combined stake is expected to rise to approximately 25.18% post-subscription.

It has been confirmed that the Wu and Yang Concert Parties have been acting in concert. Together, their pre-transaction holding was about 53.29% of the issued share capital. After the debt capitalisation, their combined holding is projected to reach approximately 71.13%. The Wu Concert Party will remain the leader of this concerted action group.

The increase in the Wu Concert Party's stake triggers a mandatory general offer obligation under the Takeovers Code. However, an exemption from this obligation has been granted by the Executive of the Securities and Futures Commission.

The debt capitalisation is expected to materially improve the group's financial health. The HK$309 million of debt being settled represented about 59.38% of the total debt of approximately RMB 449 million as of December 31, 2025.

On a pro forma basis as of that date, the transaction would reduce total debt to approximately RMB 182 million. The debt-to-asset ratio would consequently fall from about 129.29% to 52.52%.

The board believes this move is beneficial as it will substantially reduce overdue liabilities, alleviating liquidity pressure and strengthening the group's financial position. Interest on the settled debts will cease accruing from the subscription agreement date.

The company stated it had explored other financing options, including debt financing and equity fundraising, but was unsuccessful in securing bank loans or finding placement agents or underwriters for a significant capital raise. Public offerings or rights issues were considered but deemed time-consuming, costly, and difficult to underwrite given the group's net liability position and weak financial performance.